From hype to progress: what will it take to unlock long-term hydrogen demand?

Originally posted on H2 View, July 2025

Olivia Carpenter-Lomax, Head of Sustainable Energy Systems for Ricardo, shares reflections on how we move ahead with hydrogen energy.

It’s clear that hydrogen has moved beyond the peak of its hype curve. A few years ago, it was pitched as the answer to every decarbonisation challenge. Now, the narrative is evolving – and rightly so.

The sector is shifting from ambition to action. With that comes a more grounded view of where hydrogen makes sense, and where it doesn’t. That may feel like a slowdown, but I also view it as a sign of sector maturity. We’re beginning to focus efforts where they can have the greatest impact.

Demand first: stop over-focusing on production

Much of the conversation in the hydrogen sector still centres on supply – gigawatt-scale targets, project pipelines, financial close – but any viable market must be built on demand. As with any product, the focus must be on the customer: what they want, where and when. Bankable, real-world demand-side use cases are essential for progress particularly in hard-to-abate sectors like shipping, aviation, and heavy industry.

There are hard questions to ask about how we build customer confidence in hydrogen as a product, and help our customers understand it as one of the reliable and effective decarbonisation options that might be suited to their needs.

And this isn’t just about technology. It’s about system planning, regulation, incentives and market certainty. Crucially, it means understanding which decarbonisation tool best suits each application – whether that’s electrification, hydrogen, e-fuels or biofuels.

When it comes to cost parity are we asking the right question?

Cost is a reoccurring theme and a challenge often levelled at the hydrogen and clean fuels sector with the assumption that clean fuels must compete on a cost basis with fossil alternatives.

In reality, blue hydrogen will never be cheaper than the fossil gas it’s made from, and e-fuels will always reflect the cost of renewable electricity. So perhaps that’s the wrong benchmark.

Instead, these fuels should be compared with other decarbonisation options – not with today’s fossil-based status quo. The right questions are: what’s the most scalable, reliable and efficient route to net zero? What creates system value?

Sometimes, that answer will be hydrogen. Sometimes it won’t be. And that’s okay – as long as the comparison is grounded in system value, not outdated economics.

Sharing the risk, building the market

Another common challenge is risk: who carries it, and how much. Should governments underwrite offtake? Should industrial consumers be expected to pay green premiums? Should financiers recalibrate how they assess project bankability?

Governments, industry and investors all have roles to play. Whether through underwriting offtake, funding enabling infrastructure or adjusting financing models, it’s clear that risk must be more fairly shared if we want to build a viable clean fuels market. Mechanisms like mandates, contracts for difference and tax incentives will be critical. But so too will be trust and collaboration – across sectors and borders.

Prioritisation and pragmatism

We need to match the right technologies to the right use cases – guided by decarbonisation needs and system realities, not hype. That means hydrogen where it fits and other solutions where it doesn’t. Green hydrogen will be essential – but only as part of a diverse clean energy toolbox.

At Ricardo, I lead our Sustainable Energy Systems team. We support governments, utilities and developers to navigate the full complexity of energy transition – spanning clean fuels, renewable generation, digitalisation, new energy demands and infrastructure.

From this vantage point, it’s clear that hydrogen must be integrated as part of a multi-dimensional energy transition. You can’t decarbonise energy without also addressing transport, the built environment, or infrastructure. This needs cross-sector alignment, not siloed thinking.

From conversations I have been having across in the industry, momentum for hydrogen is building. But to sustain it, we need more than ambition – we need collaboration, systems thinking and a renewed focus on what delivers real decarbonisation.

Let’s keep pushing that conversation forward – with clarity, purpose, and a whole-sector view.